Treasury Delays China Currency ManipulationReport

For now, the United States is setting aside the most potentially divisive issue, deferring a decision on whether to accuse China of manipulating its currency, the renminbi, until well after Mr. Hu’s visit, according to a senior administration official. That decision, the official said, reflects a judgment that threatening China is not the best way to persuade it to allow the renminbi to appreciate against the dollar.

Many economists expect China to act on its own to loosen the tight link between the renminbi and the dollar — a policy that keeps the currency’s value depressed and makes Chinese exports more competitive in global markets.

Still, the administration’s decision not to force the currency issue now could carry political risks at home. Lawmakers on Capitol Hill have introduced legislation calling for trade sanctions against China if it does not change its currency policy. And unions and manufacturers cite the undervalued Chinese currency as a major culprit for lost jobs.

The White House would not comment on the currency issue, but an official said that if China did not take action on its own, the administration could raise the issue again at the Group of 20 summit meeting in June.

The U.S. Trade Representative also ignored China's grossly undervalued currency in their report on trade import barriers.

Last week Senator Schumer said that, regardless of what the Treasury Department decides to do in its mid-April report, he would push for a vote on a bill that would completely overhaul the process for making determinations on currency manipulation so that it would be easier and quicker to take action on China and other countries. Given that Treasury may decide to miss the deadline altogether, Schumer’s strategy now seems pretty shrewd.